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Lender Placed Insurance (LPI)

Insurance

Lender Placed Insurance (LPI), also called force-placed insurance, is coverage a lender obtains when a borrower’s required property insurance lapses, is insufficient, or cannot be verified. LPI protects the lender’s financial interest in the collateral, and its premium may be charged to the borrower, subject to applicable requirements.

LPI is typically placed only after required notices are sent and adequate borrower coverage remains unverified, helping protect residential or commercial collateral.

Why it matters for financial institutions

LPI helps financial institutions reduce loss exposure when mortgaged property is uninsured or underinsured. Accurate tracking, compliant notices, and timely placement or cancellation protect portfolios, limit false placements, reduce borrower frustration, and support regulatory compliance.